Lillian Smith, a retired nurse for Kern Medical Center's Neonatal Intensive Care Unit, reflects on the notification of benefit adjustment she received from Kern County Employee Retirement Association at her home on Thursday afternoon. Smith's retirement pay will be cut by about $400 per month after she was overpaid due to a reporting error by the county. Smith is also required to repay the overpayments from the last three years, which will amount to nearly $13,000.

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By Autumn Parry / The Californian

Lillian Smith, a retired nurse for Kern Medical Center's Neonatal Intensive Care Unit, reads aloud the notification of benefit adjustment to her husband, John Smith, at their home on Thursday afternoon. Smith's retirement pay will be cut by about $400 a month after she was overpaid due to a reporting error by the county. Smith is also required to repay the overpayments from the last three years, which will amount to nearly $13,000.

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BY LOIS HENRY Californian columnist lhenry@bakersfield.com

When she read the letter from the Kern County Employees' Association earlier this month, retired KMC nurse Nancy Davis nearly had her third heart attack.

There had been a reporting error by Kern County payroll, the letter informed her. The error would result in a "benefit adjustment."

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John and Lillian Smith are hoping to hear from other nurses who've been affected by the retirement cuts instituted by the Kern County Employee Retirement Association.

Her monthly checks would be cut by about $600. Oh, and she was told she must repay nearly $16,000 in overpayments for the last three years.

"I couldn't breathe," recalled Davis, who retired in 2009.

Lillian Smith couldn't finish reading the letter when it arrived at her house.

The hit to Smith's monthly checks will be about $400 and she was told she owed nearly $13,000. An enclosed repayment agreement suggested she could pay that off over three years at $350 a month.

"That's nearly a house payment!" she said of the combined $400 loss and $350 payment.

In all, 31 retired KMC nurses received similar letters because of the same reporting error by the county, KCERA Executive Director Anne Holdren told me.

"It's harsh message to receive," Holdren said. "It was hard to send."

It is also a unique situation, affecting just a particular set of nurses, she added.

Here's what happened:

Back in 2000 the Board of Supervisors OK'd an agreement with KMC nurses who had been on two-week pay periods of 84 hours each to reduce that to 72 hours, while still counting them as full time employees with full benefits.

Smith remembered the change well.

Nurses had been required to work four 12-hour shifts in the first week of the pay period and three 12-hour shifts the second week for a total of 84 hours, with the last four hours paid at overtime rates.

The new agreement saved the county on overtime and nurses liked the new 72-hour pay period much better.

"Twelve-hour shifts are hard," said Smith, who had worked the 84-hour schedule for 10 years. "You're on your feet the whole time. It's a hard schedule. So, we felt things worked out OK with the new pay period."

But while they were full time employees with full benefits, the agreement also specified only the 72 hours would be counted toward their retirement.

Again: regardless of how much they worked, including overtime or extra shifts, only 72 hours per pay period was supposed to have been counted toward retirement, Holdren explained.

For the last 13 years, however, the county payroll department reported the nurses as having worked full time, or 80 hours per pay period, which bumped up their retirement benefits.

The reporting error was discovered as KCERA began testing systems under the new Public Employee Pension Reform Act, which went into effect at the beginning of this year.

"We're obligated to make any correction for future benefit payments and we're obligated to pursue repayment for up to three years of any overpayments that occurred," Holdren said.

For Smith, who retired in 2007, that means, she was overpaid a total of $25,898 but because of the three-year statute, she's being asked to repay $12,890.

"We are willing, to some extent, to work with the nurses and extend the repayment plan or discuss alternatives," Holdren said.

Davis said Holdren worked out a repayment plan of $138 over the next 10 years. But Davis, a former neonatal intensive care unit nurse, has yet to sign a repayment agreement and doesn't know what she's going to do.

So far, 14 of the 31 nurses affected have contacted KCERA and signed repayment agreements. Holdren wouldn't tell me how much each nurse's benefits was reduced, nor how much each owed in overpayments.

The average reduction in benefits was $188 a month and the average overpayment amount was $4,963, Holdren said.

Smith said she won't sign a repayment agreement.

"My big question is how do I know they're not screwing up now?"

I asked what would happen if someone just flat didn't pay. Holdren said any further action, such as collections, would be up to the KCERA board.

Davis shared Smith's concerns about KCERA.

"When I got ready to retire, I took my pay stub in that said I was a 72-hour employee and I told the girl I was a 72-hour employee," Davis recalled. "She did the calculation and said this is what I would get."

Same with Smith. Except, at the time, her husband, John, did his own calculation and figured his wife's benefit should be lower.

"He argued with them but they insisted it was higher," Smith recalled.

Holdren sympathized with the Smiths and Davis, but pinned the blame squarely on the county for giving KCERA bad information.

So what? both the Smiths and Davis said. Shouldn't KCERA be auditing these things?

Yes, Holdren said, and with each payroll feed, KCERA reconciles the amount of the employee contribution with the amount reported by the county as pensionable earnings.

"What happened with these nurses was a unique situation," Holdren said. "No one in our system had that (72-hour) arrangement. The disconnect occurred from the county."

She said, though it doesn't help with the current situation, the pension reform act allows retirement administrators to audit plan "sponsors," such as the county.

"So we can take a more active roll in looking at the information we're being fed," Holdren said.

I asked Supervisor David Couch, who also sits on the KCERA board, what -- if anything -- the county could do to resolve the situation.

He didn't have an answer but said he would check with County Counsel.

Though he acknowledged the fault was with the county, he didn't think it was unfair to ask for money back that should not have been paid in the first place.

"It's not a pleasant situation but what recourse is there?" he said. "My position is we're (KCERA) following the law."

Yeah, because following the letter of the law is what's most important here.

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